I nearly choked on my afternoon tea when I searched for 'Efficient Frontier' on Google today.  Sitting there, bold as brass, was an ad for one of our competitors:

Curse Google and its trademark agnosticism. What a shame that clicking on the ad leads to a 404 (and not even a custom 404):

State of the art indeed! I blogged about something similar last year, and that led to a server error too.  Spooky.

I saw a neat bit of click arbitrage on Facebook earlier this week. I saw this ad for Stevie Wonder concert tickets (he's listed under my favourite music). Without thinking I clicked on the ad and was directed to… a page of Yahoo sponsored links.

I wonder how long it will take for Facebook to fill up with ads like this; it could easily alienate its users. It took Google a long time to introduce measures to stop arbitrage and low quality ads. How long will it take Facebook?

“Hell, there are no rules here – we’re trying to accomplish something.” – Thomas Edison

For a few months now there’s been talk in the UK about a search marketing code of conduct. This was revisited in an article in last week’s New Media Age. It first popped up last year in an NMA piece about click arbitrage, in this case with arbitrageurs buying cheap clicks on MSN. There then followed a call from MSN for a search marketing code of conduct, quickly echoed by the DMA. I said at the time I didn’t see the point of it, and I still don’t.

Why do industries have codes of conduct? Usually for two reasons: to protect consumers (just take a look at the DMA’s), or to protect themselves from future government regulation (notice the URL of Drink Aware on every ad for booze). A search code of conduct is nothing to do with either of these things – it’s about companies not being able to react to the most dynamic advertising platform there is.

The reasons cited for a code of conduct have been incredibly vague: arbitrage, and maybe affiliates. Oh, don’t forget trademarks. Or is it about how the search engines should communicate to their customers? Or is it really about an industry that’s falling short of ideas?

Being the economic liberal that I am, I believe that market forces will do a much better job of reacting to the demands of consumers and advertisers. Let me show you three examples of how this has already happened.

Arbitrage

Google’s introduction and continued improvement of a quality score has done more than anything else to reduce arbitrage inside its search listings. Advertisers with irrelevant landing pages quickly found that their minimum bids shot through the roof. Although this wasn’t to everyone’s liking, there’s no doubt it made a major impact. In the nickel and dime arbitrage game, £5 or £10 minimum bids made it unprofitable to continue.

Yahoo’s Panama system will remove arbitrageurs immediate visibility on their revenues. Many destinations for arbitrage ads are a page of Yahoo’s paid search listings. When the price of the clicks become opaque, making a profit becomes considerably more difficult.

Affiliates

Back in January 2005, Google made a significant change to its AdWords policy by only allowing a URL to be shown once per search result. Remember the days when you’d get 11 Ebay affiliate ads on one page and how awful that was? Google changed the rules, because it was reacting to its users desire for a better experience.

Campaign standards

MSN and Yahoo have nearly fallen in line with Google’s way of doing things. The structure and terminology is becoming uniform, with keywords divided between campaigns and adgroups. Ad text sizes are becoming equal too. All this makes it easier for advertisers to create a campaign once and send out easily to the three main search engines.

No doubt the debate about a code of conduct is going to drag on – too many people have hoisted the flag up their masts for it not to. But it’s a pointless, vaporific gesture. Industries should fight against unnecessary regulation. Let the market, not committees, decide the best practice for search.